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A common issue raised by politicians seeking office and pundits is the subject of wealth and income disparity. The matter is already in play for this election cycle, with the President's "tax the rich" approach. Now, given that many politicians continue to return to this well, year after year, decade after decade, clearly it must carry some weight with some voters. So I have a simple question for debate:

Loss of a middle class that leads to the collapse of the economic base, thereby fomenting violent revolution, military coups, currency instability, organized crime, and basically what has happened in Mexico.

Loss of a middle class that leads to the collapse of the economic base, thereby fomenting violent revolution, military coups, currency instability, organized crime, and basically what has happened in Mexico.

Would you care to establish with something more convincing than mere assertion that increasing wealth disparity leads to a loss of the middle class?

That it therefore leads to the collapse of the economic base, etc, etc.?

Could you also clarify what "has happened in Mexico" that you believe is a consequence of increasing wealth disparity?

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But that'll never happen here. We'll figure something out, right?

Figuring something out is a matter of correctly identifying the problem, and then applying the correct solution.

Envy is a powerful emotion. If more people had the attitude that they aren't entitled to the possessions of others, than this campaign mantra wouldn't have an impact.

Then you add in the equally powerful emotion of avarice and you have a formula for moving the human heart: they have something that I don't have and it isn't fair and somebody should do something about it.

OECD Social Indicators for 2011 offer an overview of where we stand by comparison to other countries (lots of excel documents there to peruse for those interested).

What I found the most interesting was though our society is more generous privately (by far) in general (60 percent give here as opposed to 37 percent on average elsewhere) we still have relatively low levels of trust by comparison with other first-world nations. The corresponding chart on trust level would indicate the level of trust within a society would seem to have a much closer coorelation with lower rates of wealth disparity than overall generosity. Which I think would support both Amlord's comment about envy influencing politics and, to a certain extent, AM's suggestion that income disparity can lead to social unrest and instability.

According to this, the United States has the highest level of "income inequality" of any country in the OECD (except Mexico and Turkey) as well as the highest level of wealth inequality, wealth inequality being much higher than the income inequality. The top 10% in the US have 28% of total income, but 71% of total net worth.

It would probably be a positive if we had some version of Plato's philosopher kings or philosopher monied elite like J. D. Rockerfeller's son running around buying up land and turning it into public parks. However most of these folks operate more like his daddy, preretirement.

It seems clear that extreme wealth disparity involves using money to rig the system to a great degree. I call that corrupt. A corrupt system is ultimately unstable, with compensating charity being only a band aid solution.

It would probably be a positive if we had some version of Plato's philosopher kings or philosopher monied elite like J. D. Rockerfeller's son running around buying up land and turning it into public parks. However most of these folks operate more like his daddy, preretirement.

It seems clear that extreme wealth disparity involves using money to rig the system to a great degree. I call that corrupt. A corrupt system is ultimately unstable, with compensating charity being only a band aid solution.

BINGO- we have a winner- it is because the rich in our country so often come about it dishonestly through corruption. There are way too many Dick Cheneys and Ken Lays and not enough Warren Buffets. Micheal Milkin stole from from hundreds of thousand of people and was allowed to keep his fortune when he left prison- every dime he had should have been required for him to leave jail.

It would probably be a positive if we had some version of Plato's philosopher kings or philosopher monied elite like J. D. Rockerfeller's son running around buying up land and turning it into public parks. However most of these folks operate more like his daddy, preretirement.

It seems clear that extreme wealth disparity involves using money to rig the system to a great degree. I call that corrupt. A corrupt system is ultimately unstable, with compensating charity being only a band aid solution.

All systems of government are corrupt to some level or another so to lament that these systems are unstable is not correct. All systems of government are unstable to a certain degree and are subject to various "Stress scenarios" which may topple them. A kingship or dictatorship will fail if a leader has no heir, for instance. A democracy can fail if the people do not believe the elections are fair. A commune will fail when individuals get greedy and take more than they contribute.

Wealth disparity does create another "us versus them" scenario which can divide a country's unity. However, there are many such situations in just about every country.

Amlord is right. Envy and avarice can be a powerful emotions. Much inequality stems from the makeup of the society. Nanny states have greater equality but are less efficient and have far higher tax rates. The EU is an example and countries like Greece show us that a population wedded to government is not always the best model….

Overall many societies that are “flatter” in the income scale become far less so as they grow – China is a good example. And this is not a bad thing imo.

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While spectacular affluence is emerging at the top end of China's economic hierarchy, 204 million people lived on less than $1.25 per day in 2005. China's Gini coefficient of income inequality rose from 40.7 in 1993 to 47.4 in 2004, according to an Asian Development Bank report -- a remarkably steep and rapid rise. (This compares to a Gini coefficient of income inequality in India of only 36.2.) And inequalities of income between urban and rural people continue to rise. Wheatley indicates that some experts believe that this phenomenon is the result of both rapid economic growth and a set of policies by the Chinese government that favor efficiency over equity..

Loss of a middle class that leads to the collapse of the economic base, thereby fomenting violent revolution, military coups, currency instability, organized crime, and basically what has happened in Mexico....

Obviously, then, we need to institute policies that will take us back to the GINI Index readings of the 60s and 70s, a period well known for its admirably low levels of societal upheaval, political violence, organized crime, currency instability, etc.

According to this, the United States has the highest level of "income inequality" of any country in the OECD (except Mexico and Turkey) as well as the highest level of wealth inequality, wealth inequality being much higher than the income inequality. The top 10% in the US have 28% of total income, but 71% of total net worth.

The OECD summary, unfortunately, provides no wealth inequality comparisons between the U.S. and other OECD countries. Here's one that does (chart on page 6), which shows the following (ascending order of wealth inequality; "eye ball" approximations):

Obviously, then, we need to institute policies that will take us back to the GINI Index readings of the 60s and 70s, a period well known for its admirably low levels of societal upheaval, political violence, organized crime, currency instability, etc.

I question the accuracy of the highlighted portion of your above line.

Organized crime did not begin to decline until application of RICO in the mid-80s.

Obviously, then, we need to institute policies that will take us back to the GINI Index readings of the 60s and 70s, a period well known for its admirably low levels of societal upheaval, political violence, organized crime, currency instability, etc.

I question the accuracy of the highlighted portion of your above line.

Organized crime did not begin to decline until application of RICO in the mid-80s.

His statement was obvious sarcasm. The 1960s were a decade of social upheaval, political violence, and crime (organized and otherwise).

According to this, the United States has the highest level of "income inequality" of any country in the OECD (except Mexico and Turkey) as well as the highest level of wealth inequality, wealth inequality being much higher than the income inequality. The top 10% in the US have 28% of total income, but 71% of total net worth.

The OECD summary, unfortunately, provides no wealth inequality comparisons between the U.S. and other OECD countries. Here's one that does (chart on page 6), which shows the following (ascending order of wealth inequality; "eye ball" approximations):

Actually, the report did offer this comparison, though summary didn't....as it was only a 'summary'. Here's a more comprehensive link. It's table one, left side, entitled 'gap between rich and poor' (2005). And our company looks to be more Poland and Turkey than Denmark or Germany.

I don't understand the reference to chart (6) in your link as a wealth disparity comparison...I'd think if you want to make a comparison of wealth inequality you'd compare the difference between rich (highest 10 percent) and poor (lowest 10) or something like that, which is pretty straightforward...not some extrapolation of the Wealth Gini coefficient versus percentage gpd taxed?

Obviously, then, we need to institute policies that will take us back to the GINI Index readings of the 60s and 70s, a period well known for its admirably low levels of societal upheaval, political violence, organized crime, currency instability, etc.

I question the accuracy of the highlighted portion of your above line.

Organized crime did not begin to decline until application of RICO in the mid-80s.

His statement was obvious sarcasm. ......

Correct.

QUOTE(Amlord @ Aug 22 2011, 04:16 PM)

...... The 1960s were a decade of social upheaval, political violence, and crime (organized and otherwise).

Yup. The 60s and 70s was a period that inspired the movies that made Clint "Dirty Harry" Eastwood's and Charles "Death Wish" Bronson's careers. A period depicted in the movie "Goodfellas". Etc.

Obviously, then, we need to institute policies that will take us back to the GINI Index readings of the 60s and 70s, a period well known for its admirably low levels of societal upheaval, political violence, organized crime, currency instability, etc.

I question the accuracy of the highlighted portion of your above line.

Organized crime did not begin to decline until application of RICO in the mid-80s.

His statement was obvious sarcasm. ......

I know Amlord. I saw the 60s first hand. That was before you were even born. Do you think I slept through Martin Luther King, Jr., Freedom Riders, sit-ins, and anti-war protests?

The the statement had no value other than providing akaCG a chance to see his words on the screen. Do we really need more of that? Perhaps the best way to counter akaCG's sacrcasm is to not acknowledge it.

It would probably be a positive if we had some version of Plato's philosopher kings or philosopher monied elite like J. D. Rockerfeller's son running around buying up land and turning it into public parks. However most of these folks operate more like his daddy, preretirement.

It seems clear that extreme wealth disparity involves using money to rig the system to a great degree. I call that corrupt. A corrupt system is ultimately unstable, with compensating charity being only a band aid solution.

All systems of government are corrupt to some level or another so to lament that these systems are unstable is not correct. All systems of government are unstable to a certain degree and are subject to various "Stress scenarios" which may topple them. A kingship or dictatorship will fail if a leader has no heir, for instance. A democracy can fail if the people do not believe the elections are fair. A commune will fail when individuals get greedy and take more than they contribute.

Wealth disparity does create another "us versus them" scenario which can divide a country's unity. However, there are many such situations in just about every country.

Leaving out degrees of corruption makes this a bit of a strawman response. We generally rate serial killing as worse than a single murder. In modern times dictatorships tend to have less staying power than democracies. Democracies produce internal forces that can address corruption at least. And as you suggest great wealth disparity generates major antagonism which ultimately undermines national unity. That isn't to say there aren't other forces involved. But clearly wealth disparity is an important one and requires a corrupt rigging of the system as I said. I think it has played an important role in the recent Arab spring uprisings.

Loss of a middle class that leads to the collapse of the economic base, thereby fomenting violent revolution, military coups, currency instability, organized crime, and basically what has happened in Mexico....

Obviously, then, we need to institute policies that will take us back to the GINI Index readings of the 60s and 70s, a period well known for its admirably low levels of societal upheaval, political violence, organized crime, currency instability, etc.

I get that you're being sarcastic... but said sarcasm implies you are making a link between lower income inequality and greater social upheaval. That's an incredibly bold assertion. Are you prepared to back it up with anything other than random correlation? Please, do tell. How exactly was a relative lack of income inequality the cause of "societal upheaval, political violence, organized crime, currency instability, etc?" The world wants to know! I'm certainly interested in knowing your answer, as I happen to have a bridge for sale.

There are plenty of other factors today which have contributed greatly to wealth disparity. I'd name the Internet Revolution and Globalization, just for starters. It's much easier to have an idea and turn it into billions now. Facebook couldn't have happened 30 years ago, or Google. Not that corruption isn't part of it...but for every 'corrupt' rich person, there are plenty of others who just had a good idea and ran with it...and they're more the norm. That's why Milken et al got so much press--because they were an abnormality. If you're going to play the corruption card, I'd lay it more on the politicians, but that's more about helping the rich KEEP their wealth than it is about them making it. Politicians don't really care that much about you BEFORE you're rich.

There are plenty of other factors today which have contributed greatly to wealth disparity. I'd name the Internet Revolution and Globalization, just for starters. It's much easier to have an idea and turn it into billions now. Facebook couldn't have happened 30 years ago, or Google. Not that corruption isn't part of it...but for every 'corrupt' rich person, there are plenty of others who just had a good idea and ran with it...and they're more the norm. That's why Milken et al got so much press--because they were an abnormality. If you're going to play the corruption card, I'd lay it more on the politicians, but that's more about helping the rich KEEP their wealth than it is about them making it. Politicians don't really care that much about you BEFORE you're rich.

FWIW, wealth disparity by itself shouldn't really be an issue. You can have increasing wealth disparity AND rising incomes across the board at the same time, for example. Which is part of what is missing from the wealth disparity charts--where is each country's lowest quintile in terms of income? That tells you alot more about where a country is than its wealth disparity. If you had a country that had nothing but millionaires and mult-billionaires, you'd have a very high wealth disparity, but hardly a situation that anyone should be complaining about (not that many wouldn't anyway).

It would probably be a positive if we had some version of Plato's philosopher kings or philosopher monied elite like J. D. Rockerfeller's son running around buying up land and turning it into public parks. However most of these folks operate more like his daddy, preretirement.

It seems clear that extreme wealth disparity involves using money to rig the system to a great degree. I call that corrupt. A corrupt system is ultimately unstable, with compensating charity being only a band aid solution.

All systems of government are corrupt to some level or another so to lament that these systems are unstable is not correct. All systems of government are unstable to a certain degree and are subject to various "Stress scenarios" which may topple them. A kingship or dictatorship will fail if a leader has no heir, for instance. A democracy can fail if the people do not believe the elections are fair. A commune will fail when individuals get greedy and take more than they contribute.

Wealth disparity does create another "us versus them" scenario which can divide a country's unity. However, there are many such situations in just about every country.

Leaving out degrees of corruption makes this a bit of a strawman response. We generally rate serial killing as worse than a single murder. In modern times dictatorships tend to have less staying power than democracies. Democracies produce internal forces that can address corruption at least. And as you suggest great wealth disparity generates major antagonism which ultimately undermines national unity. That isn't to say there aren't other forces involved. But clearly wealth disparity is an important one and requires a corrupt rigging of the system as I said. I think it has played an important role in the recent Arab spring uprisings.

Along the virtual edges of Wall Street exist high-end computers that perform trades faster than any human being can accurately conceive. You can't snap your fingers fast enough.

Running these computers are software programs that the brightest and best of our software developers create and make seven-figure incomes while doing so. They are paid millions to generate billions in revenue for big financial corporations, who are now actually people in the eyes of the SCOTUS.

Corruption to this depth has never been experienced before in any nation. We get to see what happens, and we have been seeing it. This can't be brushed off with a broad statement that all nations at all times have been corrupt to some degree. It's as meaningless as saying that weather has always been changing. So what?

The questions have to be what things will happen automatically to regulate the flow of wealth to the top, and concentration of that wealth among a few people, and what things will have to be enforced to regulate the flow of wealth within an economy that has computers, as described herein, at its edges. I'm not talking Apples here. These are top-of-the-line IBM and Oracle (formerly Sun Micro) machines.

One of the strengths of 18th Century capitalism was that it involved real-time human interactions. Today those interactions barely make a blip on the radar. The players on Wall Street aren't people at all, but corporations with computers who can afford the programming talent. Although I dedicated the greater portion of my life to advancing the computer field, this part of it brings shame. I am sorry the tech was put to this purpose, and I really didn't see it coming. It seemed that computerized trading would actually open the doors for the average income earner to learn investing and trading. However, with powerful computers in the mix, it has become a monster that may be out of control.

This is how the economic system is rigged to always gather money from the marks and funnel it to the top. Then when the economic system fails, the government is there to bail out the forces of greed, the Republicans are there to shift the burden to the middle class (original marks), and so the entire system is bound to eventually fail.

It will fail when the marks no longer have investment funds to plunder and too much wealth has concentrated at the top among too few people. If wealth no longer flows through an economy, the economy stagnates and dies. Those at the top will be left with worthless fiat money in the form of numbers within computers that have also become useless.

What then? I hate to think about it. Hopefully, we'll be smart enough to avoid that situation.